Victor Saccomano says his credit report is being held hostage.
He and his wife Tifanie are trying to buy a home. As part of the process and on the recommendation of a mortgage rep, the newlyweds decided to get rid of Victor’s boat. It’s not that they didn’t love the open water. They simply wanted to reduce their financial obligations.
But when Saccomano contacted the bank to pay off the loan, he said, the deal for the loan payoff actually lowered his credit score.
Here’s what happened.
CREDIT TROUBLES AHEAD
After Victor and Tifanie Saccomano married in 2009, and before long, they started working with a mortgage broker so they could buy a home. The broker ran their credit reports and while their history was positive, the suggested the couple lower their debt to qualify for the mortgage they wanted.
Saccomano said he contacted the bank several times in January and February 2011 about paying off the loan, which his credit report showed was always paid on time.
“I asked [the M&T rep] what is the least amount the bank will accept in order to not take a loss on the loan and not negatively affect my credit. After negotiations he stated that $27,000 will relieve me from any further obligations for the account/loan,” said Saccomano, of Totowa. “He also said that it would be noted that it would be reported to the credit bureau, however it should not reflect as a negative remark on my report.”
He received a letter, dated Feb. 22, 2011, confirming the payoff. It said: “M&T Bank will accept $27,000.00 as settlement in full…”
Satisfied, Saccomano sent a $27,000 check on March 11, 2011.
But that was only the start of the story.
Thinking all was well, the couple went house shopping. But then they got bad news from their mortgage broker.
“My credit score was 750 and because of this my credit was reduced by almost 100 points,” Saccomano said. “The mortgage rep stated that the report reflected that the bank lost money, which was not the case.”
M&T reported the loan as a charge-off, which indicates that the account was not paid.
Saccomano said deals on two houses fell through because of the troubles with his newly mediocre credit report.
Saccomano contacted M&T again, asking what had happened.
In August 2011, the bank told him the only way for the loan to be reported as “paid in full” would be if he did pay in full, sending another $5,615.06 on the loan.
Feeling he had no other choice – even though he felt the bank was going back on its word – he sent the money.
After the bank received the check, Saccomano received a letter. It said: “This letter confirms the… loan listed above is paid in full and close. Credit bureaus have been updated and new information posted, effective September 15, 2011.”
The credit report was not fixed on Sept. 15. Or in October. Or in November.
“They told me to pay off the remaining balance, which was roughly $5,500, and they would report to the credit bureaus that the account has been paid in full,” he said. “This was never done and my credit score has remained damaged for the first time in my 35 years of living.”
After contacting the bank again and again with no results, Saccomano contacted Bamboozled.
IT’S ALL ABOUT THE LANGUAGE
After reviewing Saccomano’s emails and letters with the bank, and Saccomano’s credit report, we contacted the bank for help.
While we waited for a response, we reached out to a few credit experts.
A charge-off and a settlement are two different things, they said.
A settlement means the lender has come to an agreement with the borrower, and after a settlement, the account has a zero balance and is considered paid in full.
A charge-off indicates that the lender wrote off the loan, essentially taking a loss and calling it a bad debt, so the borrower still technically owes the money.
Even if Saccomano was told by the rep that the $27,000 wouldn’t hurt his credit reports, the letter he received doesn’t say the same thing, said John Ulzheimer of SmartCredit.com. Saccomano needed to have “paid in full” in writing, but the letter said “settlement in full.”
And the credit report should have been corrected months ago after Saccomano paid the $5,500, he said.
“At that point any language about a settlement should have been removed since it truly was paid in full,” Ulzheimer said.
Saccomano’s deal to pay less than the full loan amount, as approved by the bank, is like getting something on sale, Ronald LeVine, a Hackensack-based consumer law attorney,
“This is a guy who asked for a discount. It’s like walking into a store with a coupon. There was never a risk of default and this guy didn’t do anything wrong,” said LeVine, who said an agreed-upon settlement with a creditor shouldn’t be listed as a charge-off. “It’s like going to a store and buying a TV for 80 bucks when it’s supposed to be 100 bucks.”
We were wondering if M&T saw it the same way.
Saccomano got a call from a rep who apologized, saying the bank wanted to go “above and beyond.” It promised to correct the credit reports and offered a $50 gift card to The Olive Garden.
“I appreciate the gesture,” said Saccomano, who is still living with his wife at his in-laws’ home. “But this whole mess cost me two houses, payments for storage units, and fees for home inspections for the homes. I don’t want to sound ungrateful, but…”
He and the bank negotiated, and the bank eventually offered to send $450 as reimbursement for the home inspection fees the couple paid on the deals that fell through. It also said it would be sending him a “release” to sign, but we don’t yet know what that document says.
“I think I have no choice but to accept it,” Saccomano said. “However, I will also require an updated document that states that my credit is fixed as well as a copy of an updated credit report reflecting the change.” M&T spokesman Kent Wissinger said he couldn’t discuss the case because of privacy issues.
“M&T Bank does strive to deliver great service to our customers and when our customer service team learns of a problem, they do work with a customer to find a solution,” Wissinger said.
We’ll let you know when the corrections come through on Saccomano’s credit report.
And in case you’re wondering, Saccomano did sell his boat last year for $23,500: $3,500 was paid as a sales commission, so he netted $20,000.
“Initially I lost $7,000 on the boat, and after [M&T] had me pay the additional $5,500, which was supposed to enable them to change the negative report to the credit agency, I was now down over $12,000,” he said. “I have been told things by M&T Bank in the past, so I will only be satisfied when I have everything in hand.”